TWO PESOS, INC., PETITIONER v. TACO CABANA, INC.

on writ of certiorari to the united states court of
appeals for the fifth circuit

[June 26, 1992]

Justice Stevens , concurring in the judgment.

It is appropriate to begin with the relevant text of
§ 43(a).
[n.1]
See, e. g.,Moskal v. United States, 498 U.S. ___ (1990); K Mart Corp. v. Cartier, Inc.,486 U.S. 281, 291
(1988); United States v. Turkette,452 U.S. 576, 580 (1981).
Section 43(a)
[n.2]
provides a federal remedy for using either "a false designation of origin" or a "false description or
representation" in connection with any goods or services.
The full text of the section makes it clear that the word "origin" refers to the geographic location in which the goods
originated, and in fact, the phrase "false designation of
origin" was understood to be limited to false advertising of
geographic origin. For example, the "false designation of
origin" language contained in the statute makes it unlawful
to represent that California oranges came from Florida, or
vice versa.
[n.3]

For a number of years after the 1946 enactment of the
Lanham Act, a "false description or representation," like "afalse designation of origin," was construed narrowly. The
phrase encompassed two kinds of wrongs: false advertis

ing
[n.4]
and the common law tort of "passing off."
[n.5]
False
advertising meant representing that goods or services
possessed characteristics that they did not actually have
and passing off meant representing one's goods as those of
another. Neither "secondary meaning" nor "inherent
distinctiveness" had anything to do with false advertising,
but proof of secondary meaning was an element of the
common law passing off cause of action. See, e. g.,G. & C.
Merriam Co. v. Saalfield, 198 F. 369, 372 (CA6 1912) ("The
ultimate offense always is that defendant has passed off his
goods as and for those of the complainant").

Over time, the Circuits have expanded the categories of "false designation of origin" and "false description or
representation." One treatise
[n.6]
identified the Court of
Appeals for the Sixth Circuit as the first to broaden the
meaning of "origin" to include "origin of source or manufacture" in addition to geographic origin.
[n.7]
Another early case,
described as unique among the Circuit cases because it was
so "forward looking,"
[n.8]
interpreted the "false description or
representation" language to mean more than mere "palming
off." L'Aiglon Apparel, Inc. v. Lana Lobell, Inc., 214 F. 2d
649 (CA3 1954). The court explained: "We find nothing in
the legislative history of the Lanham Act to justify the view
that [§ 43(a)] is merely declarative of existing law. . . . It
seems to us that Congress has defined a statutory civil
wrong of false representation of goods in commerce and has
given a broad class of suitors injured or likely to be injured
by such wrong the right to relief in the federal courts." Id.,
at 651. Judge Clark, writing a concurrence in 1956, presciently observed: "Indeed, there is indication here and
elsewhere that the bar has not yet realized the potential
impact of this statutory provision [§ 43(a)]." Maternally
Yours, Inc. v. Your Maternity Shop, Inc., 234 F. 2d 538, 546
(CA2). Although some have criticized the expansion as
unwise,
[n.9]
it is now "a firmly embedded reality."
[n.10]
The
United States Trade Association Trademark ReviewCommission noted this transformation with approval: "Section 43(a) is an enigma, but a very popular one.
Narrowly drawn and intended to reach false designations or
representations as to the geographical origin of products,
the section has been widely interpreted to create, in
essence, a federal law of unfair competition. . . . It has
definitely eliminated a gap in unfair competition law, and
its vitality is showing no signs of age."
[n.11]

Today, it is less significant whether the infringement falls
under "false designation of origin" or "false description or
representation"
[n.12]
because in either case § 43(a) may be
invoked. The federal courts are in agreement that § 43(a)
creates a federal cause of action for trademark and trade
dress infringement claims . 1 J. Gilson, Trademark Protection and Practice § 2.13, p. 2-178 (1991). They are also in
agreement that the test for liability is likelihood of confusion: "[U]nder the Lanham Act [§ 43(a)], the ultimate test is
whether the public is likely to be deceived or confused by
the similarity of the marks . . . . Whether we call the
violation infringement, unfair competition or false designation of origin, the test is identical--is there a `likelihood of
confusion?' " New West Corp. v. NYM Co. of California, Inc.,
595 F. 2d 1194, 1201 (CA9 1979) (footnote omitted). And
the Circuits are in general agreement,
[n.13]
with perhaps theexception of the Second Circuit,
[n.14]
that secondary meaning
need not be established once there is a finding of inherent
distinctiveness in order to establish a trade dress violation
under § 43(a).

Even though the lower courts' expansion of the categories
contained in § 43(a) is unsupported by the text of the Act,
I am persuaded that it is consistent with the general
purposes of the Act. For example, Congressman Lanham,
the bill's sponsor, stated: "The purpose of [the Act] is to
protect legitimate business and the consumers of thecountry."
[n.15]92 Cong. Rec. 7524 (1946) . One way of
accomplishing these dual goals was by creating uniform
legal rights and remedies that were appropriate for a
national economy. Although the protection of trademarks
had once been "entirely a State matter," the result of such
a piecemeal approach was that there were almost "as many
different varieties of common law as there are States" so
that a person's right to a trademark "in one State may
differ widely from the rights which [that person] enjoys in
another." H. R. Rep. No. 944, 76th Cong., 1st Sess., 4
(1939). The House Committee on Trademarks and Patents,
recognizing that "trade is no longer local, but . . . national,"
saw the need for "national legislation along national lines
[to] secur[e] to the owners of trademarks in interstate
commerce definite rights." Ibid.[n.16]

Congress has revisited this statute from time to time, and
has accepted the "judicial legislation" that has created this
federal cause of action. Recently, for example, in the
Trademark Law Revision Act of 1988, Pub. L. 100-667, 102
Stat. 3935, Congress codified the judicial interpretation of
§ 43(a), giving its imprimatur to a growing body of case law
from the Circuits that had expanded the section beyond its
original language.

Although Congress has not specifically addressed the
question whether secondary meaning is required under
§ 43(a), the steps it has taken in this subsequent legislation
suggest that secondary meaning is not required if inherent
distinctiveness has been established.
[n.17]
First, Congress
broadened the language of § 43(a) to make explicit that the
provision prohibits "any word, term, name, symbol, or
device, or any combination thereof " that is "likely to cause
confusion, or to cause mistake, or to deceive as to the
affiliation, connection, or association of such person with
another person, or as to the origin, sponsorship, or approval
of his or her goods, services, or commercial activities by
another person." 15 U.S.C. § 1125(a). That language
makes clear that a confusingly similar trade dress is
actionable under § 43(a), without necessary reference to "falsity." Second, Congress approved and confirmed the
extensive judicial development under the provision, including its application to trade dress that the federal courts had
come to apply.
[n.18]
Third, the legislative history of the 1988amendments reaffirms Congress' goals of protecting both
businesses and consumers with the Lanham Act.
[n.19]
And
fourth, Congress explicitly extended to any violation of
§ 43(a) the basic Lanham Act remedial provisions whose
text previously covered only registered trademarks.
[n.20]
The
aim of the amendments was to apply the same protections
to unregistered marks as were already afforded to registered marks. See S. Rep. No. 100-515, p. 40 (1988). These
steps buttress the conclusion that § 43(a) is properly
understood to provide protection in accordance with the
standards for registration in § 2. These aspects of the 1988
legislation bolster the claim that an inherently distinctive
trade dress may be protected under § 43(a) without proof of
secondary meaning.

In light of the general consensus among the Courts of
Appeals that have actually addressed the question, and the
steps on the part of Congress to codify that consensus, stare
decisis concerns persuade me to join the Court's conclusionthat secondary meaning is not required to establish a trade
dress violation under § 43(a) once inherent distinctiveness
has been established. Accordingly, I concur in the judgment, but not in the opinion of the Court.

Notes

1
The text that we consider today is § 43(a) of the Lanham Act prior to
the 1988 amendments; it provides:

"Any person who shall affix, apply, or annex, or use in connection with
any goods or services, or any container or containers for goods, a false
designation of origin, or any false description or representation, including
words or other symbols tending falsely to describe or represent the same,
and shall cause such goods or services to enter into commerce, and any
person who shall with knowledge of the falsity of such designation of
origin or description or representation cause or procure the same to be
transported or used in commerce or deliver the same to any carrier to be
transported or used, shall be liable to a civil action by any person doing
business in the locality falsely indicated as that of origin or in the region
in which said locality is situated, or by any person who believes that he
is or is likely to be damaged by the use of any such false description or
representation." 15 U.S.C. § 1125(a) (1982 ed.).

2
Section 43(a) replaced and extended the coverage of § 3 of the
Trademark Act of 1920, Ch. 104, 41 Stat. 534, as amended. Section 3
was destined for oblivion largely because it referred only to false
designation of origin, was limited to articles of merchandise, thus
excluding services, and required a showing that the use of the false
designation of origin occurred "willfully and with intent to deceive." Ibid.
As a result, "[a]lmost no reported decision can be found in which relief
was granted to either a United States or foreign party based on this
newly created remedy." Derenberg, Federal Unfair Competition Law at
the End of the First Decade of the Lanham Act: Prologue or Epilogue?,
32 N. Y. U. L. Rev. 1029, 1034 (1957).

3
This is clear from the fact that the cause of action created by this
section is available only to a person doing business in the locality falsely
indicated as that of origin. See n. 1, supra.

4
The deleterious effects of false advertising were described by one
commentator as follows: "[A] campaign of false advertising may
completely discredit the product of an industry, destroy the confidence of
consumers and impair a communal or trade good will. Less tangible but
nevertheless real is the injury suffered by the honest dealer who finds it
necessary to meet the price competition of inferior goods, glamorously
misdescribed by the unscrupulous merchant. The competition of a liar
is always dangerous even though the exact injury may not be susceptible
of precise proof." Handler, Unfair Competition, 21 Iowa L. Rev. 175, 193
(1936).

"Beginning in about 1803, English and American common law slowly
developed an offshoot of the tort of fraud and deceit and called it `passing
off' or `palming off.' Simply stated, passing off as a tort consists of one
passing off his goods as the goods of another. In 1842 Lord Langdale
wrote:

" `I think that the principle on which both the courts of law and equity
proceed is very well understood. A man is not to sell his own goods
under the pretense that they are the goods of another man. . . .'

"In 19th century cases, trademark infringement embodied much of the
elements of fraud and deceit from which trademark protection developed.
That is, the element of fraudulent intent was emphasized over the
objective facts of consumer confusion." 1 J. McCarthy, Trademarks and
Unfair Competition § 5.2, p. 133 (2d ed. 1984) (McCarthy) (footnotes
omitted).

9
See, e. g., Germain, Unfair Trade Practices Under § 43(a) of the
Lanham Act: You've Come a Long Way Baby--Too Far, Maybe?, 64
Trademark Rep. 193, 194 (1974) ("It is submitted that the cases have
applied Section 43(a) to situations it was not intended to cover and have
used it in ways that it was not designed to function").

11
The United States Trademark Association Trademark Review
Commission Report and Recommendations to USTA President and Board
of Directors, 77 Trademark Rep. 375, 426 (1987).

12
Indeed, in count one of the complaint, respondent alleged that
petitioner "is continuing to affix, apply, or use in connection with its
restaurants, goods and services a false designation o[f] origin, or a false
description and representation, tending to falsely describe or represent
the same," and that petitioner "has falsely designated the origin of its
restaurants, goods and services and has falsely described and represented the same . . . ." App. 44-45; see Tr. of Oral Arg. 37.

14
Consistent with the common law background of § 43(a), the Second
Circuit has said that proof of secondary meaning is required to establish
a claim that the defendant has traded on the plaintiff's good will by
falsely representing that his goods are those of the plaintiff. See, e. g.,Crescent Tool Co. v. Kilborn & Bishop Co., 247 F. 299 (1917). To my
knowledge, however, the Second Circuit has not explained why "inherent
distinctiveness" is not an appropriate substitute for proof of secondary
meaning in a trade dress case. Most of the cases in which the Second
Circuit has said that secondary meaning is required did not involve
findings of inherent distinctiveness. For example, in Vibrant Sales, Inc.
v. New Body Boutique, Inc., 652 F. 2d 299 (1981), cert. denied, 455 U.S. 909 (1982), the product at issue--a velcro belt--was functional and
lacked "any distinctive, unique or non functional mark or feature." 652
F. 2d, at 305. Similarly, in Stormy Clime Ltd. v. Progroup, Inc., 809 F.
2d 971, 977 (1987), the court described functionality as a continuum, and
placed the contested rainjacket closer to the functional end than to the
distinctive end. Although the court described the lightweight bag in
LeSportsac, Inc. v. K Mart Corp., 754 F. 2d 71 (1985), as having a
distinctive appearance and concluded that the District Court's finding of
nonfunctionality was not clearly erroneous, id., at 74, it did not explain
why secondary meaning was also required in such a case.

"The purpose underlying any trade mark statute is twofold. One is to
protect the public so it may be confident that, in purchasing a product
bearing a particular trade mark which it favorably knows, it will get the
product which it asks for and wants to get. Secondly, where the owner
of a trade mark has spent energy, time, and money in presenting to the
public the product, he is protected in his investment from its misappropriation by pirates and cheats. This is the well established rule of law
protecting both the public and the trade mark owner." S. Rep. No. 1333,
79th Cong., 2d Sess., 3 (1946).

By protecting trademarks, Congress hoped "to protect the public from
deceit, to foster fair competition, and to secure to the business community the advantages of reputation and goodwill by preventing their
diversion from those who have created them to those who have not. This
is the end to which this bill is directed." Id., at 4.

16
Forty years later, the USTA Trademark Review Commission assessed
the state of trademark law. The conclusion that it reached serves as a
testimonial to the success of the Act in achieving its goal of uniformity: "The federal courts now decide, under federal law, all but a few
trademark disputes. State trademark law and state courts are less
influential than ever. Today the Lanham Act is the paramount source
of trademark law in the United States, as interpreted almost exclusively
by the federal courts." Trademark Review Commission, 77 Trademark
Rep., at 377.

17
"When several acts of Congress are passed touching the same subject matter, subsequent legislation may be considered to assist in the
interpretation of prior legislation upon the same subject." Tiger v.
Western Investment Co., 221 U.S. 286, 309 (1911); see NLRB v. Bell
Aerospace Co., 416 U.S. 267, 275 (1974); Red Lion Broadcasting Co. v.
FCC, 395 U.S. 367, 380-381 (1969); United States v. Stafoff, 260 U.S. 477, 480 (1923) (opinion of Holmes, J.).

18
As the Senate Report explained, revision of Section 43(a) is designed "to codify the interpretation it has been given by the courts. Because
Section 43(a) of the Act fills an important gap in federal unfair competition law, the committee expects the courts to continue to interpret the
section.

"As written, Section 43(a) appears to deal only with false descriptions
or representations and false designations of geographic origin. Since its
enactment in 1946, however, it has been widely interpreted as creating,
in essence, a federal law of unfair competition. For example, it has been
applied to cases involving the infringement of unregistered marks,
violations of trade dress and certain nonfunctional configurations of
goods and actionable false advertising claims." S. Rep. No. 100-515,
p. 40 (1988).

19
"Trademark protection is important to both consumers and producers.
Trademark law protects the public by making consumers confident that
they can identify brands they prefer and can purchase those brands
without being confused or misled. Trademark laws also protec[t]
trademark owners. When the owner of a trademark has spent conside[r]able time and money bringing a product to the marketplace, trademark
law protects the producer from pirates and counterfeiters." Id., at 4.